George Soros is a Hungarian-American billionaire, philanthropist, investor and author. He was born in Budapest in 1930. He chairs Soros Fund Management and Open Society Foundations. The Open Society Foundation supports democratic ideals in many countries. He is also among 30 of the richest people in the world and is one of the greatest financiers in history. Due to this, his views on investing and economic issues get a massive following.
George Soros predicts that there would be great consequences if Great Britain opts to leave the European Union. He says that there would be a currency and stock market disaster if that happens. Some of the people who agree with him include former soccer star David Beckham and British Prime Minister, David Cameron. He further continued saying that if Britain left the European Union, the British Pound would be severely weakened, and standards of living would be lowered. He cited what happened in 1992, commonly known as ‘Black Wednesday’ when the British currency lost 15 percent of its value due to Britain opting out of the European Exchange Rate Mechanism. Soros said in an opinion article in the Guardian newspaper that this time round it could be even worse and that the currency could fall by 20 percent or more.
The supposed proposal of Britain to exit from the European Union is known as “Brexit.” As with the case of the 1992 exit which brought about a rise in manufacturing exports, George Soros noted that it would be highly unlikely this time round. He estimated that the pound and the euro would be of the same value if “Brexit” were to happen. During Britain’s European Exchange Rate Mechanism exit, Soros Quantum Fund bet against the British currency, and he made a profit of a billion pounds. This incident occurred on a Wednesday, and that’s why it was given the name “Black Wednesday.” The British Pound at the time was overvalued against Germany’s currency. Soros gave three main reasons as to why Brexit wouldn’t be as beneficial as Black Wednesday. These reasons are:
– The Bank of England cannot afford to cut the rate from the already low levels.
– Brexit would bring about uncertainty in trading conditions and hence the loss of currency value wouldn’t help exports.
– Currently, the UK has a large current account deficiency, and there is a probability that there will not be another inflow of cash.
Soros said that a vote to leave could lead to a “Black Friday” at the end of the week.
Learn more about George Soros: http://topics.wsj.com/person/S/george-soros/209